Our obsession with customer service to deliver a world leading net promoter score (NPS).
Thrilled to chat to Dominic Monkhouse about our obsession with customer service, our world-class net promoter score (NPS), and how we go about hiring and retaining millenials.
Welcome to the Melting Pot, episode 2. I’m Dominic Monkhouse. And today I’m sitting down with David Tudehope, CEO of the Macquarie Technology Group in Australia. He co-founded the business back in 1992 and now serves as CEO of this publicly listed business in Australia turning over $200 million. Since its inception the business has been obsessed with delivering great customer service. And he’s going to tell me how he got the business to where it is today. It’s one of the best in Australia, in fact not just in Australia, but with their high levels of net promoter score (NPS) they are one of the best services businesses in the world. He’s going to tell me how they got there, how they keep there, and also how he’s reworking his business model to find a way to attract younger workers.
Hello Dom I’m David Tudehope, CEO of Macquarie Technology Group.
Thank you for taking the time to talk to me today. There’s a couple of things I wanted to talk to you about. One is the customer service journey that you’ve been on, and the other is the what other people might see as the challenge of hiring graduates or millennials, which I know you’ve got an interesting take on. Maybe we start with customer service, tell me the story line; where are you, where have you been, how long did it take.
Look our journey started when the business was founded 25 years ago, and we focussed in the beginning on customer service. The challenge we had was that our original business was a telecom business, and while we were the best in our industry, we were the best of a bad bunch. And about 10 years ago, there was a famous article in the Harvard Business Review which was around the research that later formed the promoter score. And I saw it and I thought “that’s so powerful, the idea of 1 number to measure what we’ve been doing for many years, a number that you can compare to others, and a number that gives that clarity that you can work towards as a goal”. And I remember at the time I sent it back to my marketing department, and said this is exactly what we need to do, this can replace that 50 question survey that we send out twice a year.
And the note came back that said “David we’re aware of this, we’ll add this to our 50 question survey as the 51st question”. And I wrote back and said that this should be the ultimate question, the one question that has the highest correlation with whether a customer stays and refers us to their friends. This should replace the whole survey. They said “No, we’re tracking all of these things, it’s more complicated than that.” And I guess in the spirit of empowerment I let it go and moved on to lots of other things.
In hindsight, it’s one of the greatest mistakes I’ve made in my career. Because about 2 years later I was invited to a breakfast by one of the authors of what had then become a text book, ‘The Ultimate Question’, who was visiting Australia for a short time and once again he brought it to life. He told some case studies, ran a few videos, and I was so inspired. I came back and I said “guys, this is the ultimate question, this has the highest correlation with the things that we most care about. This is the one thing we should measure, and we should get rid of all of the other measures”.
Again, the same sort of reaction, but I said “Guys, this is it”. And we made that change, as CEOs can do, and it has transformed our business over the subsequent 8 years. And I believe the reason why it’s transformed our businesses is that it’s taken something that’s always been at the heart of who we are, having a great customer experience, and given us a number to measure it by. The problem before NPS came along, was that there were so many questions and so many ways of interpreting it, that you had almost too many data points and people could pick and choose the one that fitted their own preferences and their own views.
We have one question, and one number that is the answer so you can really focus and energise people around that. And the last 8 years it has transformed our business and we’ve seen the customer experience improve dramatically. We measure over half of our completed interactions, and measure our entire customer base a couple of times a year. And we have an early warning of drop offs in customer service that we can address immediately, rather than waiting for it to come back through customer buying decisions. And we’re most importantly able to (because we have such a high sample rate) enable our staff to make great choices around how they can improve the customer experience, how a supervisor can improve the customer experience rather than it being about what management can do. Because they have the data, it’s real time, we share it immediately with the staff member (a few seconds after the is completed, the NPS result goes to them). And it’s inside the team they can see it as well.
So it’s been very powerful, we measure nowadays 8 different key touch points to determine the customer experience and I just wish I adopted it 10 years ago when I first saw it. And it’s reimagined, I believe, our business in an industry (and in our market) notorious for very poor customer service. We’ve made our business goal today (and this is 8 years in the making) to not just have the best customer experience in our industry (which we’ve always kind of had, but it was the best of a bad bunch), but now the best customer experience of any public listed company in Australia. In any industry, bar none.
What is your current net promoter score?
So when we started the journey it was +14. The competitors were negative at the time, but by no means a great score (and this is 8 years ago).
We grew it to about 4 years ago around the +30 mark, and then we’ve since grown it further towards our goal which we set ourselves originally. Which was an ambitious goal at the time of +50. And then we hit the +50 goal much faster than we expected, once we set that. And then we’re now today at +69 for the whole company, and two of our business units are at +83.
World class, alongside Apple and First Direct, one of the UK telephone banks.
What are the type of things that a team does (cause quite often people look at the score, they do their survey, they publish their survey, but they don’t do stuff to change the score). What are some of the things that along the way you think “we did that and it didn’t work, or we did that and it really made a difference to the score?
In the last 2 years I’ve started talking to people like yourself Dom, sharing our journey, and what I’ve learnt when I’ve had the conversations is that the majority of people that adopt net promoter score, do not adopt all of it. They adopt the bits they feel comfortable with, and the bits they feel uncomfortable with (like the transparency of the data, like the fast feedback loop within 24 hours, things like this), they don’t adopt. And I think it is one of those systems where to get real benefits from NPS, you have to be all in. You have to adopt the whole methodology, and you have to be absolutely determined to execute to that. It can’t be simply, as we did it initially for the first couple of years, another dial on the dashboard, which you can pick and choose whether you like the number or not. I think that’s why you do see people thinking, “well I tried NPS for a couple of years, and nothing changed”. Well adopting NPS will change nothing by itself. It’s what you do around it.
I guess the other part of your question is the execution, and in our journey, initially, there were a number of things that were significant items around systems or processes that we needed to do centrally. And we got some good wins that got us from the +14 to the +30s. But when we hit the +30s, what we found was that the central programs to improve customer experience were actually becoming increasingly counter-productive. Despite all the goodwill. And I believe the reason for that is, as the customer experience starts becoming very strong, as it is at +30, because the scale is -100 to +100 so you’re well above the norm. Often the levers you deal with centrally in a significant corporate, what you prove with one hand you kind of have an impact somewhere you haven’t fully appreciated that actually takes the experience down somewhere else. And in fact the dials become more finer, and you need to tune them more carefully. And it’s very hard to do that centrally. So what we found is that the people who really took us from the 30s to the 50s to the 60s, have in fact been the front line staff and the immediate managers, who can change those dials, who can change the way we interact with customers, can change the empowerment and the decision process around small things that often are quite impactful on the experience. And that’s what’s got us to the next level. But the only way you can do that of course is with having very high sample rates.
On the sample rates, I know that’s a conversation that we’ve had before. Have you got some top tips about fixing people’s low sample rate?
There’s a few ways of doing it, certainly transparency helps enormously because they quickly realise that if they don’t have a high sample rate, one or two scores for individuals can sway the outcomes. So they quickly work out that it’s in their best interests to have a good sample rate.
Also, the key is to not rely on email surveys. It’s important to sample immediately after the experience is over, not even a few hours later. Customers just move on. The interaction they had with you is only a small part of their lives and if it’s not particularly bad or good, most customers don’t bother responding thinking it wasn’t a noteworthy enough experience.
The single most important thing is if you do the phone call back within 24 hours from the supervisor to the customer who scored us poorly (so 0-6 out of 10 in the “would you recommend” question). If you call them back within 24 hours, even though you’re calling them back on something that didn’t go well, it has an incredibly reinforcing experience that you really do care about what they think. And if it’s a real life person who is genuinely interested in why they give the score without any sort of judgement or trying to convince them to change their mind. The customer thinks “wow, they really care”. And I think what a lot of companies forget is that when they do those anonymised surveys after the event, the person responds and they send back one of those trite sort of “we value your feedback” type responses, it just says to this the customer “they don’t value my feedback”. And they hear no more. And they won’t do the survey again, because they feel it’s pointless, and their voice hasn’t been heard by the organisation. But when someone calls so quickly and is genuinely interested and ask open questions to understand why, that’s got a really powerful reinforcing effect.
If we could turn to the other thing that you guys do which I haven’t see anybody else doing the same way, it’s that interplay of onshore vs offshore and graduates and millennials and fixed term contracts. Tell me more about the hub.
Well I guess for us, it’s part of our brand, because we saw ourselves as doing the opposite to our competitors. Where they zig, we zag, in our industry, both in the Telecom businesses as well as the IT industry. Tens of thousands of jobs being sent offshore to India and elsewhere for customer service, and we saw an opportunity to do the opposite of our competitors. We were inspired by what we saw, in a very small number of examples, of what could be done onshore. But you had to do exceptionally well, because you have, after all, a cost base probably three times for an employee what it would be if the same role had been overseas.
We spent a lot of time understanding what a young person in their early twenties, mid twenties, maybe late twenties and some cases, who’s just finished their undergraduate degree, wants. What kind of role they would value, and what their expectations were. It was fascinating. One of the things we found was that when I graduated from university, you always looked for a career. Not a job for life (that was probably more the post-war generation). But you still wanted a career, and you wanted a good job that would lead to another good job in time. But what we’ve found in our research is that the current generation are not looking for that sort of play, they’re actually interested in a role that they’ll have excellent training and development, that they see the role as a time frame more like 2 years. Although it varies of course, some people think of it as a year and a bit, and others might see it as a 3 or 4 year role. But typically 2 years is about the time frame, and they want to do more things in their life. And quite often their thinking is “I’ll do this role for a period and then I’ll travel. Then I’ll do something completely different outside of the workforce, maybe something to do with the community. Or I might have a career. I’ll see how it turns out”.
What we’ve done is with all our new graduate trainees (although we don’t call them that, we call them customer service professionals), with their undergraduate degrees, we say to them “you have a two year contract, we commit to a level of training for them over that 2 year period”. But they also commit to actually doing the training and passing exams. We give them automatic pay rises when they pass exams, and that idea of continual development, of continual reward and recognition, and then an end date to this role, has been very powerful both in terms of getting the right sort of people on board in the first place. People like to learn and people like to grow. But also it’s had the effect of saying to them “you know what, at that the end of two years, I will graduate professionally from this role and at the end of 2 years I can then go and do what I want to do next; be it travel, or work. And our experience is about a third of our staff leave after 2 years, they travel or something. We thought about a third would probably leave and go to a competitor, which we’re totally fine with (after the 2 year period). But we’ve probably found that only a significant portion (about half of them) end up moving to a different role inside Macquarie after the 2 years.
Does the program attract the best graduates? I mean, did it at the beginning? Does it now? Have you built some reputation in Sydney around the program.
We’ve got two programs, and there’s a slight difference between them; ones for more technical people, and one’s for people with non-technical degrees. And the technical degree program probably does attract the ones who’ve got stronger technical backgrounds, because they’re quite excited about working for a company that does have real career paths in technology. But what we’re looking for more than grades at university, is we’re looking for people who have a genuine customer service gene inside them. Who generally like serving other people. Enjoy it. And it’s a bit like in your own family and friends circle. It’s not someone who knows how to fix problems with laptops or software. It’s also people that have a style, and an approach, where you actually enjoy interacting with them after they’ve helped you with your laptop or your software. It’s actually a pleasure, and you feel good afterwards. Whether the program was a complex one that you really needed them for, or something embarrassingly simple that you probably could have solved for yourself if you had have known how.
It’s the ones where you come away from that experience feeling like it was a good one. And that’s the sort of person we’re looking for, in their early or mid twenties.
Thank you very much David. Can I ask you one more question? What’s the one thing that you believe that most people don’t?
I think one of the most important pieces is, and it’s often talked about, and it’s the idea of an employee value proposition. And I’ve certainly spent a lot of time looking at it. I think you do have a unique opportunity when people start out, to really craft that. And to track people who believe in that value proposition, as opposed to try to sell it to people who have already come on board with some other sets. People have become, I think, a bit skeptical sometimes of EVPs, they’re just things created by the HR department, they sit on websites. I actually have seen that they’re very effective, like with our graduate recruitment I’ve spoken about, you just attract the people who actually want to be there. And yes it does mean you miss out on some people that otherwise you would have hired, but what you get is a completely aligned organisation. And I’ve seen that at times where there’s been some bumps along the road, you’ve created such a strong culture and such a strong commonality of purpose and expectations that that team of people just carry through that bump without any impact on service or staff.